Pete Bevington

10 April, 2008

SHETLAND Development Trust has finally been booted off the board of the Faroese ferry operator Smyril Line five years after it rescued the company from a financial crisis.

Last night (Wednesday) the trust confirmed that the two majority shareholders in Smyril had defeated an attempt to keep a representative on the board.

Now Shetland is looking to recoup its investment of more than £4 million in the company, which it had vainly hoped would consolidate the islands transport links with Scandinavia.

Yesterday’s Smyril Line annual general meeting brought to an end the five year shareholders’ agreement that guaranteed the development trust a seat on the board.

Back in 2003 the trust had invested £4.6 million to become the majority shareholder in the firm, who needed the cash to go ahead and build their new £60 million ferry Norröna.
The deal brought Lerwick into the Norröna’s year round schedule, with an office opening at the Holmsgarth terminal employing three people.

However the massive vessel has not had a happy history, starting with an accident in the Torshavn harbour in her first year of operation and culminating in losses of more than £5 million in 2006 alone.

The past year has seen a desperate bid to turn the company’s fortunes around, which has involved closing the Lerwick office and dropping the islands from its sailing schedule altogether in favour of Scrabster on the Scottish mainland.

In yesterday’s final blow Shetland, which still holds 16 per cent of the company’s shares through the development trust, has been pushed off the board entirely.

The company said it wanted to have just five directors with “appropriate business skills”, as opposed to merely shareholder representatives.

At the meeting trust chairman Josie Simpson called for Shetland director Bobby Hunter to retain his seat on the board, but was outvoted by the majority shareholders - Faroe firm Framtak and Icelandic TF Holdings. The trust will now only have a voice at the AGM.

Yesterday Mr Simpson said: “The trust is disappointed that this ends our active involvement in the company’s management at board level. However we will continue to monitor our investment and hope that Smyril Line can continue to strengthen its position in the market.”

On a more personal note, Mr Hunter added: “I have enjoyed my time as a director, and am disappointed that I will no longer be involved with the company.

“I was pleased to be reassured by the company that my non re-election was due to strategic changes and not because of any personal performance issues.

“I wish the company well and hope that Shetland recoups its investment in the near future.”

Last week Shetland businessman John White was chosen to set up a new shipping link between Shetland and Norway, which many hope will rebuild the islands’ historic sea link with its North Sea neighbour.

The NORSHUKON project will see a weekly freight service between Norway, Scotland Belgium propping up a smaller weekly freight service between Lerwick and Kriostiansund, on Norway’s west coast.

Mr White hopes the new operation will eventually carry passengers between Shetland and Norway, as the Norröna did until the end of last summer.

Her last visit to Shetland was in November when she limped into Lerwick harbour after being damaged in a violent storm.